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Thursday, October 6, 2016

Nothing is more frustrating than seeing poorly drafted letters of demand written by “professional” practising attorneys simply ignoring the National Credit Act’s requirement of “notice of intention to list on a credit bureau.” The consequence of these inadequate letters in the market place has the ramification that the early removal of the default effectively allows the tenant to get away with their non-performance.

The stark reality is that not all letters of demand are created equal. How so? Your ability to successfully blacklist a non-paying tenant is entirely dependent on the letter of demand that you send. If it is incomplete or inaccurate in any way, it can fail so spectacularly that the silence of your tenant’s non-performance is deafening.

Why letters of demand are bombing

TPN is seeing a marked increase in the number of LOD’s that are actually adding to the already exorbitant loss of a non-paying tenant rather than mitigating it. Crazy? We would say so.

There is a reason all this is happening: not everyone in our industry understands the implications of the National Credit Act. This has little to do with competence and everything to do with not fully understanding and integrating the nuances of our rental law with the requirements of the National Credit Act as it applies to credit bureaus.

In simple terms, it means that you cannot successfully blacklist a tenant unless you have sent a letter of demand that contains the accurate, legally compliant clause required by the NCA.

In short your letter of demand must notify your tenant of your intention to list on the credit bureau.

If not, your attempt at loading a default will be dead in the water.

The latest directive from the National Credit Regulator

In a directive sent out earlier this year, the National Credit Regulator has made it clear that if a listing is removed, it may not be re-listed under any circumstances. Therefore, you only get one bite at the apple!

If you do not notify the tenant of the intention to list a default in your letter of demand, you cannot list the tenant. And if you do continue to load the default because you or your legal representative didn’t know any better? It will be removed and you cannot re-list the information. Ever.

Not only can anything happen to anyone at any time, but it also happens with varying degrees of gravity. If you combine that kind of uncertainty with the very complicated set of legislative requirements that currently intertwine in our rental law, you can easily be lead to taking the wrong action. Considering how rapidly the financial implications of that can snowball - it is just not worth it.

The solution is remarkably simple: make sure you send a letter of demand that genuinely gives you your power back - like the TPN letter of demand. In our experience, it is the only thing that really works.

About TPN

TPN is a registered credit bureau dedicated to the South African property industry. Michelle Dickens is MD of TPN and is one of the most respected industry leaders in the South African rental market. Her insights and advice help thousands of estate agents and landlords across South Africa.